A critical ingredient for real estate success is to have a plan. It is important to have dreams of success, but it is vital that you plan for success. To be able to be successful in real estate investing you need to set goals. These goals need to be realistic goals. Setting goals is simply writing on paper what you want out of life. What do you want to attain in life? What are your dreams? Write them down. Now what do you need to do to achieve those dreams? Write it down. Now create a timeline to achieve those dreams. You now have your short term and possibly some long-term goals set.
Working to achieve your dreams by setting goals will help keep you motivated. Without motivation many new investors will procrastinate. Procrastination is the destroyer of dreams and your financial success. You have chosen to participate in this program because you are motivated to succeed. By following a proven plan of action, you will be able to achieve wealth and financial independence.
Short-term goals are usually goals that can be accomplished within one year or less. Short term goals should have steps leading to long term goals. Long term goals are based on a one to five year plan. They are considered long term planning and could cover all aspects of your life.
Whether short term or long term, goals should be specific enough in detail to pinpoint what you want to accomplish. They should be measurable-you should be able to measure progress. They should be action-oriented (something that you do-not just something you wish for and hope it will happen). Use action words in setting your goals. They should be realistic, something you can realistically accomplish. And goals need to be timely and have a deadline. You need to have flexible goals that you can adjust when needed.
When you write your goals you become more accountable. Your level of commitment increases and you will be more successful achieving your goals.
Thinking big is great, but we cringe when we hear someone say, “I want to make a million dollars in real estate in my first year.” Everyone loves a dreamer, but there’s a fine line between dreams and delusions! Someone who earns $50,000 a year and has no prior experience in real estate probably wouldn’t make that kind of money by next Christmas.
What kinds of expectations are realistic for a beginner? The best approach is to set short-term, intermediate, and long-term goals. Be sure your goals are realistic, specific, and attainable. For example, your goals may look like this:
• Ten-year goal: Retire with $10,000 in passive income per month, inflation-adjusted. This may require between $3 and $4 million in free-and-clear rental real estate.
• Five-year goal: Acquire between $3 and $4 million in real estate in steadily appreciating areas. Buy, fix, and flip five properties per year at an average profit of $20,000 to replace current income.
• One-year goal: Buy, fix, and flip two properties and acquire three rental properties to keep.
• Six-month goal: Buy one rental property and one fixer-upper.
Be as specific as possible and take time to do the math. For example, if your goal is to retire within 15 years, how much income will you need to attain that goal? If you need $10,000 per month, will that require owning and collecting rent on five houses? Ten houses? Will you be managing that property? If you pay a manager, how will that affect your bottom line? If you need $10,000 in today’s money, what will that amount be worth adjusted for inflation? The more diligently you put the pen to paper—or the fingers to the keyboard—the better prepared you’ll be.
To avoid setting yourself up for certain disappointment and possible financial disaster, you must forget the dream of becoming an overnight millionaire. Instead, focus on the slow-and-steady route, aiming to accumulate wealth one small step at a time, one deal at a time.
And, most important, be conservative in your approach. Think things through. Be conservative and cautious while always considering the risks.